Syndicate Results 2019 #36 Syndicate 1200 Argo

Active Underwriter – J Moffatt

The Lloyd’s syndicates have now published their results and, in some cases, added detail and an outlook for 2020. As in the past two years, IMN is summarizing the results from all syndicates that have a marine interest which have provided some information on the marine side.

Syndicate 1200 principally writes accident and health, motor, third-party liability, marine, fire and peril insurance.

Gross written premiums reduced from £589.2m in 2018 to £561.4m in 2019. This resulted in a £27.4m loss, compared to a loss of £35.9m in 2018. The combined ratio increased to 109.2% from 107.7%.

Tony Latham, Chairman, said that in the previous annual report he had noted that Argo had implemented remedial actions after an intensive review of underperforming lines of business.

“In 2019 this review process continued where underperformance persisted or where improved rates and conditions failed to materialise as expected. This led to an exit from Hull and from Onshore energy as well as placing our Lloyd’s platforms in Singapore and China into run off. We also closed the Miami office”, said Latham.

For 2019 the syndicate’s results were affected by a series of large losses on 2017 and prior underwriting years, and increased attritional losses on those same years. These losses were largely on lines of business that Argo has since exited, or subclasses of businesses no longer written. Latham said that this obviated the need for further reassessment.

He noted that Argo also experienced large loss activity on 2018. Following further actuarial work and 12 months of experience of the remediation effort already in place, Argo decided to reassess its initial expected loss ratios. “We have added an extra layer of caution to our loss picks to reflect execution risk in the current underwriting years”, said Latham.

There was a loss to capital providers from the 2017 and Prior Years of Account of 21.5%. This compares unfavourably with the loss forecast last year of 13.6%.

Argo said that in 2019 nearly all classes of business had benefited from improved market conditions. Early signs suggested that this improvement is continuing in 2020.

KPIs £m 2019 2018
Gross written premium 561.4 589.2
(Loss) for the financial year (27.4) (35.9)
Combined ratio 109.2% 107.7%

2018 and 2019 years of account – open

In Marine Argo saw large losses in Onshore Energy, Hull and Asia and attritional development on one large coverholder in Marine Liability (all of which led to Argo either exiting the business or, in the case of Marine liability non renewing the relationship during 2019).

Sectors (1)

Year of account 2019 F % 2018 F % 2017 A %
Marine Cargo 2.4 3.8 4.5
Yachts & Hull 2.9 4.8 5.7
Offshore Energy 5.9 6.2 5.4
Marine Liability 6.7 6.0 5.2

Outlook

Argo said that it was positive around the outlook for 2020, following recent catastrophe losses, market wide underperformance and a much more stringent Lloyd’s planning process. “We have seen a significant number of exits and reduced capacity in a number of lines of business, notably in US Property, Construction. Marine and Professional Indemnity”, the syndicate said.

Sectors (2)

2019 £m GPW GPE GCI GOE RB Total
Marine 28.4 34.7 (26.8) (11.8) (1.0) (4.9)
Energy – Marine 13.7 13.8 (9.3) (4.1) (1.5) (1.1)
Total Direct 412.0 431.9 (277.7) (122.5) (39.4) (7.7)
Reinsurance acceptances 149.4 141.0 (123.6) (46.6) (1.4) (30.6)
Grand Total 561.4 572.9 (401.3) (169.1) (40.8) (38.3)
2018 £m GPW GPE GCI GOE RB Total
Marine 41.2 46.6 (30.8) (12.7) (12.4) (9.3)
Energy – Marine 12.4 12.7 (8.4) (2.6) (7.6) (5.9)
Total Direct 421.3 396.9 (266.4) (105.6) (60.4) (35.5)
Reinsurance acceptances 167.9 169.1 (94.9) (52.1) (17.0) 5.1
Grand Total 589.2 566.0 (361.3) (157.7) (77.4) (30.4)

https://www.lloyds.com/investor-relations/financial-performance/syndicate-reports-and-accounts/2011/03/1200